It’s literally impossible for me to discuss money without singing that dreadful song.
And those lyrics are basically all I know about money.
Okay, maybe that’s a bit of an exaggeration. But only slightly. I am definitely not a financial wizard, but let me tell you: I’ve come a long way, baby. Even though, sure, Charles Schwab’s Financial Fitness tool may not uh, agree with me, as I only scored a 31, I can tell you that several years ago, I would have scored a big fat ZERO.
Money is definitely a complicated thing for me. For a long time, I really feared it as an enemy. When I first started actually using money—you know, having a bank account, writing checks, etc.—I didn’t really quite get it. I wasn’t good at balancing my checkbook, I bounced checks regularly and never seemed to quite have enough. I would buy things as soon as I got paid, meaning that by the next week? I was BROKE. It was really easy for me to spend, spend, spend with nary a thought of things I might need or want the week after.
I’ve written before about the fact that I married young, and subsequently divorced. While married, my husband controlled every single last penny. I wasn’t privy to bills, wasn’t “allowed” to spend money freely and really had no idea what bills were and how to pay them in a timely manner. When we divorced, we did what seemed easiest to me at the time: split our debt by our own credit cards (he had a few cards, and so did I, both in our own names) and I kept the car I’d been driving, which had a seriously high payment and had to be re-financed. It wasn’t until later that I realized just how screwed I was. He got off nearly scott free, sans car payment, and without telling me about the debt he’d put on MY credit cards.
Stupidly, when we separated, I got my own place instead of living with a roommate, and expected to maintain the same lifestyle I’d had: cable, internet, going out with friends, shopping, and buying groceries and clothes with reckless abandon. I slowly charged more and more on my credit cards and then? I lost my job. I was completely unprepared, had no unemployment insurance and didn’t know what to do.
Thankfully, my parents and grandparents helped me financially until I got back on my feet…sort of. As I got jobs that paid better, I was able to pay my bills again, but would still come up short sometimes, either due to poor planning or my own overspending. The summer after my first year of teaching, things got really bad, and I knew I had to take action.
The fact is, I will never be rich as a teacher, or in any of the fields I am interested in. But, no matter how much or little money I make, I can take control. Here are a few things I try to do that help me stay on track:
- BUDGET. I use a simple spreadsheet to figure out how much I owe and what’s left. Don’t forget savings, or money for little essentials. The rest can go to “fun money” or saving for a trip. But know your own bank account.
- Learn the difference between needs and wants. I mean, yes, I do want everything at Target and on Etsy and to eat out with my friends every night. BUT. Those things aren’t all possible. I try to wait 48 hours before making purchases that are frivolous, because usually I forget what it is that I wanted in the first place. I also try to figure out if I’ll actually use what I want, or if it’s a silly thing I won’t use anyway.
- Learn to say NO. I think this might be the biggest challenge for me as a 20-something. I love the people in my life and always want to be present for birthday parties, nights out and other fun events. Financially, that’s not always wise. Andrea taught me a lovely phrase to help with this: “I’d really like to (come to the bar, attend this show, etc.) but I’d rather use my limited resources in a different way.” It baffles some friends of mine that I prefer saving for a trip to Vegas with The Internet over nights at a dive bar, but saying this instead of “I can’t afford it” keeps people from asking why you said you were broke but can then purchase something else later.
- Figure out what matters to you. I’m not a stuff person, I’m an experiences person. I’d rather buy concert tickets than a new outfit and I’d rather grab a drink than buy something else. Other people really value stuff and would rather have an amazing wardrobe than a dinner out. Know what works for you and your financial values.
Like I said, I’m by NO MEANS a financial expert, but these are the things that work for me. I may not be able to diversify my stocks, but hey, I can pay my bills and keep myself in thrifted clothes and wine.
What are your financial rules?
Copyright © 2012
This is great advice. I love Andrea’s phrasing, too–helpful!
i think about how many hours i’ll have to work in order to buy something. that usually curbs my desire to spend because i’ve figured out working more to pay for stuff is pretty over-rated.
i recommend reading – Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence by Joe Dominguez + Vicki Robinson <–totally changed my view on money.
I definitely need a lesson on distinguishing between needs and wants.. Always difficult for me.
Best,
Hannah Katy
i think that phrase from andrea is so key and makes so much sense. i mean if someone told me no to something just because and then they went and bought a brand new bag or something i’d be a little offended. but to tell me, i’m saving for something else would definitely be understandable.
also, this post as a whole is awesome. nicely done amy.
Sounds like you had some major struggles there. You poor thing, but what an awesome achievement to have come out smiling & with words of wisdom.
I’ve always been a saver – and I lived at home until I was 24, which was super helpful. I saved. And saved. And saved. And I think that’s what helped me – just not letting myself spend unless I could absolutely justify what it was for. And now that we’re in Europe and co-sharing, we’ve worked out our budget together.
My biggest tip is just to put away SOMETHING with every paycheck. It’s amazing how fast it adds up, and it’s almost like a pleasant surprise when it comes time to use it.
I find it easier to not buy stuff (read: crap I don’t need) when I have something big to save for. Right now we’re house shopping, so it’s easy for me to pass up a cute pair of shoes in favor of, say, new kitchen cabinets in the future.
I’m a decade older than you and still feel like I’m just getting the hang of this financial stuff. Bills owed versus variables. Needs versus wants. Yes, all of that is important. So is saving tax refunds and surprise bonuses from work.
I absolutely have the hardest time saying no to my friends. It’s the worst! And my husband only exacerbates it!
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Love this post.
Saying no to friends is the hardest thing, I think. I’ve learned to say no and to also say yes to going out, but not to spending. Sometimes that doesn’t work with certain people, so they are the ones who get the flat NO.
Another thing I’ve found helpful is learning to wait. I want a new camera lens or a plane ticket or something that costs a nice chunk of money, so I add it to my list of wants and wait until I can afford it. I know that if I’m constantly thinking about it I can find a way to save up to make it happen.
Great list. I’m still working on that “learning to say NO” thing, though… it’s so HARD in the SUMMER when there are MARGARITAS to be had!!!
I can really identify with this post, much more so than other posts on this subject. I love your tips because I think they are easy-to-follow and also very true. I really need to sit down and make a budget. I keep telling myself I need to do that, but then I just don’t.
Yeah, money sucks. It actually sucks. Let’s have a budgeting party!
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